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ATAL PENSION YOJANA (APY)



  Mar 29, 2024

ATAL PENSION YOJANA (APY)



Introduction to Pension and APY

A pension is essential for ensuring a dignified life post-retirement by providing a consistent monthly income, especially when one’s earning potential diminishes with age. The Atal Pension Yojana (APY) is a government-backed pension scheme in India designed specifically for the unorganised sector, offering guaranteed monthly pensions ranging from Rs. 1,000 to Rs. 5,000 at the age of 60 based on the subscriber’s contributions.

Who Can Subscribe to APY?

APY is open to all Indian citizens between the ages of 18 and 40 years. A savings bank account or post office savings account is a prerequisite for joining. While Aadhaar and mobile numbers facilitate updates and communication, Aadhaar is not mandatory for enrollment.

Duration of Government Co-contribution

The Government of India provides a co-contribution for five years, from the fiscal year 2015-16 to 2019-20, for subscribers who are not covered by any Statutory Social Security Schemes and are not income tax payers. The co-contribution is up to 50% of the subscriber’s total contribution, with a maximum of Rs. 1,000 per annum.

Exclusion from Government Co-contribution

Beneficiaries of statutory social security schemes are not eligible for the government co-contribution under APY. This includes members of schemes such as the Employees’ Provident Fund and various other provident fund schemes.

Pension Amounts under APY

The APY guarantees minimum monthly pensions of Rs. 1,000 to Rs. 5,000 at 60 years of age, depending on the subscriber’s contributions.

Benefits of Joining APY

The APY guarantees a minimum pension with the government funding any shortfall between actual and assumed returns on contributions. Conversely, excess returns will be credited to the subscriber’s account. The government also provides a co-contribution for eligible subscribers.

Contribution to APY

Contributions are invested according to PFRDA guidelines. The process for opening an APY account involves visiting a bank branch or post office with a savings account, filling the APY registration form, and ensuring sufficient account balance for contributions.

Contributions, Default, and Maintenance Charges

Contributions to APY can be monthly, quarterly, or half-yearly via auto-debit. Insufficient funds on the due date lead to default, incurring overdue interest charges. The APY accounts attract certain maintenance fees and charges for account operation and management.

Nomination and Account Opening

Nomination is mandatory in APY, with the spouse being the default nominee for married subscribers. A subscriber can only open one APY account, which is unique to them.

Withdrawal and Exit from APY

Subscribers can withdraw upon reaching the age of 60, with the pension payable to the spouse upon the subscriber’s death. Voluntary exit before age 60 involves refunding the subscriber’s contributions minus the government co-contribution. In the event of a subscriber’s death before 60, the spouse may continue in the scheme, or the accumulated corpus will be returned to the nominee.

Contribution Flexibility and Monitoring

Subscribers can modify their pension amount and contribution levels annually. The APY scheme provides for periodic SMS alerts and annual statements to keep subscribers informed about their contributions and account balance.

Relocation and Citizenship Status

Contributions to APY can continue seamlessly across different locations. The scheme is restricted to Indian citizens, and loss of citizenship will lead to account closure.

Transition from Swavalamban to APY

Existing Swavalamban scheme subscribers aged 18-40 are automatically migrated to APY, with an opt-out option. Subscribers above 40 can withdraw their corpus or continue until age 60 for annuities.

Changing Contribution Frequency and Age Limits

Subscribers can change their contribution frequency once annually in April. The age limit for joining APY is strictly between 18 and 40 years, making it imperative for interested individuals to subscribe within this age bracket to secure their retirement with a steady pension.


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